The Bank of Israel’s foreign exchange reserve portfolio is expanding, and will no longer be satisfied with the dollar-euro-pound currency mix: the bank added the Chinese yuan, the Japanese yen, the Canadian dollar and the Australian dollar to the portfolio, according to the Bank’s foreign exchange reserves report.
“It has been decided that as of 2022 the Monetary Committee has decided to adopt a broad currency marker that includes seven major reserve currencies, at the following weights: 61% US Dollar, 20% Euro, 5% Pound, 5% Japanese Yen, 3.5% Australian Dollar, 3.5% USD Canadian and 2% Chinese yuan, “the report said.
The additions mark a change in the “Investment Guidelines and Philosophy of the Bank of Israel,” the Deputy Governor Andrew Abir was quoted as saying in Bloomberg.
To accommodate the changes, the euro’s share will fall from more than 30% to just 20% – the lowest rate in at least a decade, while the dollar will stand at 61%, down from 66.5%. The weight of the pound, however, will almost double to 5%, returning to the level last seen in 2011.
A report by the Bank of Israel explains that “In China, the economic recovery continued, when in 2021 the economy grew at a high rate of 8.1%, after being among the few countries with positive growth during 2020. However, during the year there was a moderation in the rate of expansion due to shortages. In energy products, among other things, following the proactive shutdown of coal mines, in order to meet pollutant emissions targets, activity in the real estate market slowed due to difficulties in a number of large real estate companies and a decline in growth in private consumption. Loan Prime Rate and also act to devalue the yuan by raising the foreign exchange reserve ratio. At the same time, the Bank acted to curb the risks in the real estate market, among other things by leaving the LPR interest rate unchanged for five years, along with supporting the acquisition of real estate projects of companies in difficulty by stronger companies. The government worked during the year to tighten regulation on a number of sectors, including the technology and private education sectors. This has contributed to the underperformance of the local stock market during the year. ”